NZD drifts lower, fails to hold 0.6700
The NZD traded softly on Wednesday and gradually lost ground against the USD throughout the day. The market was circumspect ahead of the closely watched jobs data report out this morning. The data can influence the RBNZ on their monetary policy stance and will help determine whether a rate hike in Dec is on the cards. Overnight, the NZD opened near the high at 0.6725 and failed to hold onto the 0.6700 handle eventually trading a low of 0.6660. NZD/USD opens at 0.6685 this morning.
AUD loses ground despite rate hike
The Reserve Bank of Australia raised their cash rate by 0.25% to 6.25% yesterday, a widely expected result. The market focused on the tone of the statement that was less hawkish than anticipated and by consequence weighed on the AUD. The implications of the Democrats winning power in the House of Reps and the stepping down of Rumsfeld indicates less US budget spending on Iraq, more fiscal discipline will help the USD and so the AUD weakness continued. The AUD weakened from 0.7750 to 0.7678 but staged a late recovery to close at 0.7710.
Little reaction following Democrat gains
Attention on the US mid-term elections is now seen waning with little market reaction to the Democrats gaining control of the House of Representatives and this morning’s announcement of Donald Rumsfeld’s resignation. The euro slipped from an overnight high of 1.2808, dipping to 1.2746, while the greenback strengthened to 118.01 high against the yen. The yen was undermined following comments from the normally hawkish BoJ policy board member Atushi Mizuno, who suggested that Japanese interest rates should only be increased gradually and was unspecific as to timing. Sterling, which ranged between 1.9008 and 1.9098 overnight, remains in focus with the Bank of England’s MPC widely expected to raise UK interest rates to 5.00% tonight.
No major US data.
Canadian housing starts up 6.8% in Oct. A 23% surge in multiple family starts saw total starts post their first gain in four months.
UK consumer confidence higher. The Nationwide survey showed a surge from 89 to 98 in October, its strongest since January. Falling petrol prices will have helped.
